TSEM7410 - Deceased persons: conditions for informal payment procedures

From 6 April 2024, estates with income of all types up to £500 will not pay income tax on that income as it arises. Where income exceeds that amount, tax will be payable on the full amount. s24B ITA2007.

The £500 tax-free amount will apply: 

  • for every tax year of administration, but unused amounts do not roll over to subsequent years when reporting under informal procedures 

  • to all types of income, after taking off ISA income which continues to be exempt after a person has died until closure or up to 3 years following the death 

If an estate has no chargeable income and no chargeable gains then there is no need to notify HMRC, either formally via the Trust Registration Service and Self-Assessment, or under informal procedures. 

Conditions for Informal payment procedures

If tax is due to be paid, Personal representatives may make an informal payment of the total tax liability for the whole period of administering the deceased’s estate, if certain conditions are met.

The main condition is that the total tax liability (income tax plus capital gains tax) for the entire administration period is less than £10,000. The other conditions are that

  • the gross value referred to on the Grant of Probate/Confirmation is less than £2.5m, and
  • the proceeds of assets, whether those assets are chargeable or not, sold by the personal representative in any one tax year are less than £250,000 for deaths up to 6 April 2016, or
  • the proceeds of assets, whether those assets are chargeable or not ,sold in any one tax year are less than £500,000 for deaths on or after 6 April 2016.

An informal payment may not be accepted where any part of the payment relates to:

  • tax on payments within ITA/S946 or
  • a recovery of tax overpaid under Section 30 TMA 1970, or
  • the recovery of excessive tax credits under Section 252 ICTA 1988.

Disposals of residential property

Disposals of residential property should still be reported via the Capital  Gains Tax on UK property Service

SA return issued

Informal payments may not be accepted where a Notice to file a Trust and Estate Self Assessment tax return has been issued to the personal representatives.